International Tropical



International Tropical

Timber Organization

INTERNATIONAL ORGANIZATIONS

CENTER,5TH FLOOR,

PACIFICO-YOKOHAMA1-1-1,

MINATO-MIRAI, NISHI-KU,

YOKOHAMA, 220-0012, JAPAN

itto-mis@itto.or.jp

Tropical Timber Market Report

1 – 15th March 2003

Contents

International Log Prices p2

Domestic Log Prices p2

International Sawnwood Prices p4 Domestic Sawnwood Prices p6

International Ply and Veneer Prices p7 Domestic Ply and Veneer Prices p8

Other Panel Product Prices p9

Prices of Added Value Products P10 Rubberwood and Furniture Prices p11

Report From Japan p12

Report From China p14

Update on France p15

Report from Holland p17

Abbreviations and Currencies p20

Appendix:

Price Trends

Economic Data Sources

HEADLINES

W. African loggers and millers complaining about new regulations. Page 2

Ban on Mahogany harvesting extended.

Page 2

African mills with full order books but no signs of better prices. Page 4

Peru's exporters complain of falling Mahogany prices. Page 5

The MIFF and MAFEX shows in Malaysia.

Page 11

Brazil moves to standardising furniture quality. Page 11

December and January log arrival high, prices soften in Japan. Page 12

Manufacturers face high costs as glue costs climb. Page 13

Analysts in UK fearful that economy back to boom and bust cycle. Page 17

Dutch traders concerned over bad press given to wood. Page 18

International Log Prices

Sarawak Log Prices

(FOB) per Cu.m

Meranti SQ up US$160-165 (

small US$130-135 (

super small US$100-105 (

Keruing SQ up US$130-135

small US$100-105

super small US$75-85

Kapur SQ up US$145-150

Selangan Batu SQ up US$155-160

West African Log Prices

Once again no prices changes were reported since mid February. Prices remain stable and production continues rather low for the time of the year. Cameroon sawmillers still building up log stock before the rains set in.

The main news is that loggers and millers are complaining about the new taxes in Gabon and more regulations in Gabon and Cameroon.

FOB LM B BC/CC

Euro per Cu.m

Afromosia/Assamela 381 350 -

Acajou/N'Gollon 175 152 -

Ayous/Obeche 175 160 106

Azobe 145 122 114

Bibolo/Dibtou 145 106 -

Fromager/Ceiba 114 114 -

Iroko 274 228 -

Limba/Frake 122 107 99

Moabi 221 198 -

Padouk 206 168 -

Sapelli 221 206 175

Sipo/Utile 274 244 -

Tali 129 129 91

Doussie 427 335 -

Myanmar

Veneer Quality FOB per Hoppus Ton

January February

4th Quality

Average US$4104 US$4153

Teak Logs

Sawing Quality per Hoppus Ton

Grade 1

Average US$3244 US$3261

Grade 2

Average US$2692 US$2884

Grade 3

Average US$997 US$899

Grade 4

Average US$1371 US$1361

Assorted US$905 US$876

Other Hardwoods

Padauk

4th Quality US$1295 No Sale

Assorted Quality US$791 No Sale

Yemane No Sale US$172

Oo-Ban No Sale US$172

Kaung-Hmu No Sale US$181

Kadat No Sale US$172

Kanzo No sale US$172

Hoppus ton equivalent to 1.8 Cu.m. Teak 3-4th Grade for sliced veneer. Teak grade 1-4 for sawmilling. SG Grade 3 3ft - 4ft 11" girth, other grades 5ft girth minimum.

Domestic Log Prices

Brazil

Mahgany Harvesting Ban Extended

The ban on the harvesting of mahogany in Brazil has been extended for another 150 days. No licenses will be issued, and no private estate will be allowed to harvest mahogany, even if there is a forest management plan. During this period, estates are only authorized to continue the preparatory phase for the next.

Brazil's government published a decree on February 14, in Brazil's Official Journal, suspending the Mahogany harvest and creating a Mahogany Special Commission. The same decree proposes tax incentives for the forestry sector to promote sustainable development in the Amazon region.

The Special Commission shall, within 100 days, define a new sustainable development policy for the sector. By establishing a 100-day period for the Commission to meet its deadline, President Lula intends to guarantee that the Mahogany harvest will not become unfeasible, from the second quarter.

In explaining these measures, the Minister of Environment, Ms. Marina Silva, and the Minister of Agriculture, Mr. Roberto Rodrigues, observed that "forest resource sustainable harvesting is fundamental for the Amazon's economic and social development". This sector generated 500,000 jobs, and from 1971 to 2001, earned US$3.9 billion from foreign markets

Logs at mill yard per Cu.m

Mahogany Ist Grade No Sales

Ipe US$55 (

Jatoba US$30

Guaruba US$20

Mescla(white virola) US$20 (

Carbon Trading News

Brazilian steel company V&M do Brasil, a branch of the Vallourec and Mannesmann Tubes, signed one of the most important carbon dioxide equivalent agreements (CO2eq) recently. For the next ten years, at an annual value of euros 1.5 million, Brazil's steel tube producer will sell 5 million tonnes of carbon dioxide (CO2) equivalents to the Dutch government.

The letter of intent signed by the IFC-Netherlands Carbon Facility (INCaF), a member of the World Bank Group, which will support the project in the long-term. The stocks transfer to the Netherlands begins with this year's production. The project is based on investments to insure the supply of vegetable carbon, produced in a sustainable way. By these means, the use of coke in the production of steel is reduced making it possible to reduce approximately 21 million CO2 tonnes in the atmosphere.

For every 1 million steel tonnes produced with coke, 1.89 million tonnes of CO2 are generated. With wood charcoal, gas emissions fall to 1.58 million tonnes, a 21% reduction. This sustainable production method enabled V&M Brasil to negotiate carbon dioxide equivalent trades with industrialized nations, as foreseen by the Kyoto Protocol.

This Brazilian company developed a project to produce steel tubes, using wood charcoal as a thermal reducer. Wood charcoal is a renewable source of energy that comes from forest plantations, certified by the Forest Stewardship Council (FSC) and ISO 14001. This program, it is claimed, completely neutralizes the company's carbon emissions.

Indonesia

Domestic log prices per Cu.m

Plywood logs

Face Logs US$65-75

Core logs US$40-50

Sawlogs (Merantis') US$65-80

Falkata logs US$80-90

Rubberwood US$49-50

Pine US$65-75

Mahoni US$495-500

Peninsula Malaysia

Logs

Domestic (SQ ex-log yard) per Cu.m

DR Meranti US$175-180 (

Balau US$175-180

Merbau US$220-225

Peeler Core logs US$70-80

Rubberwood US$48-50

Keruing US$130-135 (

Ghana

per Cu.m

Wawa US$24-37

Odum US$73-152

Ceiba US$20-24

Chenchen US$21-40

Mahogany

(Veneer Qual.) US$61-134

Sapele US$37-122

Makore

(Veneer Qual.) US$40-133

Peru

The government of Peru has decided to initiate the second process for forest concessions in Madre de Dios and Ucayali regions. Now also included in this process is the Loreto region where the concession allocation process was stopped in 2002 because of the opposition of the Frente Patriotico de Loreto (Patriotic Front of Loreto). Alvaro Quijandría, Peru's Agriculture Minister said that the different regional authorities are in agreement in order to avoid social unrest and problems that happened before in this process.

This time a total of 3.25 million hectares will be bid for:

Madre de Dios: 250mil Hectares.

Ucayali: 1 million Hectares.

Loreto: 2 millions Hectares.

The Agriculture Minister pointed out that San Martin Region's forests have not been included in this process because of the social problems in the region because of the problems experienced previously with the process.

Source: INRENA- Press dept. (13-03-2003)

International Sawnwood

West African Sawnwood

Sawmills in the region still very busy with full order books but there are no signs of any moves to increase prices for either logs or lumber in spite of the additional taxes and difficult to apply regulations.

As mentioned in previous reports, the relatively low priced South American lumber and the slightly less buoyant prices for Meranti/Seraya seem to have ruled out any substantial prices changes for W. African suppliers this month though perhaps in the second quarter we may see a gentle upwards trend.

Some operators have already moved plant and equipment from Gabon and Cameroon to other countries in the region to avoid the mounting new rules and regulations. Others are said to be contemplating a move within the next 2 years.

There is some renewed interest in the region from Asian operators and one has already made an investment

FOB per Cu.m

Okoume Euro

FAS GMS 266

Standard and Better 251

FAS Fixed Sizes 297

Sipo

FAS Standard Sizes 640

FAS Fixed Sizes 670

Sapelli FAS 487

FOB per Cu.m

Dibtou

FAS Standard Sizes 381

FAS Fixed Sizes 412

Iroko

FAS GMS 548

Scantlings 487

Strips 274

KhayaFAS GMS 398

Brazil

Tropical wood demand and prices experienced a slight reduction this month. Most products experienced some kind of price fall in reaction to reported high stock levels in the United States and Europe. Pine plywood prices continue to fall as a result of oversupply of Brazilian products in the international market. It is expected that in March/April some producers significantly lowered production levels, due to price reductions and raw log supply limitations.

FOB Belem/Paranagua Ports

Export Sawnwood per Cu.m

Mahogany KD FAS FOB

UK market no trade

Jatoba Green (dressed) US$555 (

Cambara KD US$430 (

Asian Market(green)

Guaruba US$240

Angelim pedra US$290 (

Mandioqueira US$180 (

Pine (AD) US$120 (

Malaysia

Sawn Timber

Export(FOB) per Cu.m

White Meranti A & Up US$290-295 (

Seraya

Scantlings (75x125 KD) US$510-520

Sepetir Boards US$190-200

Sesendok 25,50mm US$285-295 (

Merbau (75mmx125mm US$505-515

Ghana

Export lumber, Air Dry FOB

FAS 25-100mmx150mm and up 2.4m and up

FOB Euro per Cu.m

Afromosia 855

Asanfina 472

Ceiba 180

Dahoma 272

Edinam 350

Khaya 520

Makore 449

Odum 540

Sapele 460

Wawa 260

Peru

The price of Mahogany is reportedly falling in many of Peru's producing regions. Analysts attribute the fall to low demand in the export markets.

According to the the trade, the reasons for the distruption of the trade are first the recent authorization given by IBAMA for export the seized Mahogany in Brazil and the slow down in the US economy. Many Peruvian exporters are reportedly simply stocking the mahogany until there is an increase in demand and better prices are offered. Source: Magazine PERU FORESTAL - Press dept.

For US Market per Cu.m

Mahogany 1C&B, KD 16%

Central American market US$1700-1200

Mahogany 1C&B, KD 16%

US market US$1170-1210

Walnut 1" Thickness,

6' - 11' length US$630-645

Spanish cedar # 1 C&B,

KD 16% US$600-640

Virola 1" to 1 1/2 per Cu.m

Thickness, 6' - 8'

length, KD US$290-300

Lagarto 2" Thickness,

6' - 8' length US$280-300

Ishpingo 2"

Thickness 6' - 8' length US$370-400

Timber Imports

Peru's timber imports in fell in 2002 to US$ 34.121 million, down just over 4% compared to 2001. Particle and fibreboard imports (US$ 8,89 mil) were up 16.5% and imports of furniture and parts stood at US$ 6,8 mil or up 17%. Woodbased panel demand mainly comes from the construction sector with some for the furniture sector also.

Domestic Sawnwood Prices

Report from Brazil

The prices of most wood products remain relatively stable.

Prices for solid wood products based on pine from plantations are expected to rise in the next few months due an expected increase in pine log prices reflecting a reduction in pine log supply in Brazil.

Prices of tropical wood products are still expected to increase over the next few months due to a recovery in demand and also due to supply shortages. It is now the rain season and large volumes of fresh logs will only be entering in the mills in April.

Sawnwood (Green ex-mill)

Northern Mills per Cu.m

Mahogany No sales

Ipe US$204

Jatoba US$145

Southern Mills

Eucalyptus AD US$63 (

Pine (KD) First Grade US$90 (

Report from Indonesia

Sawn timber, ex-mill

Domestic construction material

Kampar per cu.m

AD 6x12-15x400cm US$215-225

KD US$290-300

AD 3x20x400cm US$300-310

KD US$315-325

Keruing

AD 6x12-15cmx400 US$205-210

AD 2x20cmx400 US$210-220

AD 3x30cmx400 US$220-230

Malaysia

Sawnwood per Cu.m

Balau(25&50mm,100mm+)

US$225-235

Kempas50mm by

(75,100&125mm) US$150-155

Red Meranti

(22,25&30mm by180+mm)

US$220-225 (

Rubberwood

25mm & 50mm BoardsUS$185-190 (

50-75mm Sq. US$195-200

75mm+Sq. US$210-215 (

Ghana

Sawnwood per Cu.m

50x100mm

Odum US$144

Wawa US$39

Dahoma US$71

Redwood US$97

Ofram US$58

50x75mm

Odum US$135

Dahoma US$77

Redwood US$64

Ofram US$64

Emeri US$64

Peru

per Cu.m

Mahogany US$1485-1490

Virola US$180-195

Spanish Cedar US$630

Catahua US$172-177

Tornillo US$347-358

International Plywood and Veneer Prices

Indonesia

Plywood (export, FOB)

MR, per Cu.m

Grade BB/CC

2.7mm US$225-230

3mm US$200-205

6mm US$165-175

Brazilian Plywood and Veneer

The Brazilian Association for Mechanically Processed Timber (ABIMCI) will be speaking on Brazil's Wood Quality National Programme (PNQM), at a workshop, on Tuesday, April 8, 2003, at the Brazilian Embassy in London.

The purpose of the workshop is to divulge the PNQM in Europe. PNQM is a national system for wood product quality certification. PNQM's main objective is to make available to the market products with known specifications, produced under controlled parameters. At the moment, PNQM is operating with pine and tropical plywood.

FOB Belem/Paranagua Ports

Veneer FOB per Cu.m

White Virola Face

2.5mm US$175

Pine Veneer (C/D) US$135

Mahogany Veneer per Sq.m

0.7mm No trade

Plywood FOB per Cu.m

White Virola (US Market)

5.2mm OV2 (MR) US$220

15mm BB/CC (MR) US$210

For Caribbean countries

White Virola

4mm US$255

12mm US$220

Pine EU market per Cu.m

9mm C/CC (WBP) US$175 (

15mm C/CC (WBP) US$160 (

Malaysian Plywood

MR Grade BB/CC FOB per Cu.m

2.7mm US$240-245 (

3mm US$200-205 (

9mm plus US$165-175

Domestic plywood

3.6mm US$245-255 (

12-18mm US$180-185

Ghana

Rotary Veneer Core Face

1mm+ 1mm+

Bombax, Chenchen, Euro per Cu.m

Kyere, Ofram,

Ogea,Otie,Essa 321 356

Ceiba 263 302

Mahogany - 462

Core Grade 2mm+ per Cu.m

Ceiba US$217

Chenchen, Otie, Ogea,

Ofram, Koto, Canarium US$265

Sliced Veneer

Euro per Sq.m

Face Backing

Afromosia 1.19 0.69

Asanfina 1.14 0.67

Avodire 0.92 0.51

Chenchen 0.72 0.44

Mahogany 1.03 0.62

Makore 1.01 0.52

Odum 1.54 0.92

Plywood Prices FOB

Redwoods

Euro per Cu.m

WBP MR

4mm 447 372

6mm 278 252

9mm 256 239

12mm 248 229

15mm 252 232

18mm 246 228

Light Woods

WBP MR

4mm 402 266

6mm 273 218

9mm 238 202

12mm 225 184

15mm 229 187

18mm 204 170

Peru

FOB For Mexican Market per Cu.m

Copaiba plywood,

two faces sanded, B/C,

15x4x8mm US$320-350

Virola plywood,

two faces sanded,

b/c, 5.2mmx4x8 US$350-380

Lupuna plywood, treated,

two faces sanded,

5.2mmx4x8 US$300-310

Lupuna plywood, b/c ,

15mmx4x8 US$300-310

b/c, 9mmx4x8 US$320-330

b/c, 12mmx4x8 US$305-315

c/c 4x8x4 US$330-340

Veneer Prices

FOB per Cu.m

Lupuna 2.5mm US$195-200

Lupuna 4.2mm US$205-215

Lupuna 1.5mm US$225-230

Domestic Plywood Prices

Brazil

Rotary Cut Veneer

(ex-mill Northern Mill) per Cu.m

White Virola Face US$97 (

White Virola Core US$85

Plywood

(ex-mill Southern Mill)

Grade MR per Cu.m

4mm White Virola US$271 (

15mm White Virola US$190 (

4mm Mahogany 1 face No trade

In recent news, IBGE's (Brazilian Institute of Geography and Statistics) consumer price index (IPCA) determined that Brazil's January 2003 inflation rate was 2.3%. According to the IPCA, Brazil's January inflation rose 6.7%, compared to last December. This was the highest inflation rate recorded for any January since the launch of the Real Plan, in 1994.

Inflation growth occurred due to the rise in fuel prices, specially gasoline, which rose 8.8% in January, 2003. For the period of January 15 to February 12, IBGE measured the IPCA 15-day inflation rate at 2.2%, which was 9.6% higher than the previous 15-day period. This sharp growth was mainly due to price readjustments in public transport and petrol.

In order to keep its target of an 8.5% inflation rate for 2003, and a 5.5% inflation rate for next year, Brazil's Central Bank (BC) has risen the basic annual interest rate from 25.5% to 26.5%. Brazil's BC measured the average dollar/real exchange rate for January at R$ 3.44. Nevertheless, this February, the exchange rate is currently at R$ 3.60.

Brazil's accumulated Gross Domestic Product (GDP) from January to December 2002 reached US$ 512 billion, which represented a 1.6% rise, in relation to 2001. In January of this year, Brazil had a US$ 1.2 billion trade surplus, by far, the highest recorded for the months of January, since 1997. Over this period, Brazil exported US$ 4.8 billion and imported US$ 3.7 billion. The trade surplus for the first two weeks of February was US$ 261 million, much higher than last year's entire February surplus.

Indonesia

Domestic MR plywood

(Jarkarta) per Cu.m

9mm US$195-210

12mm US$170-180

18mm US$155-170

Peru

Lupuna Plywood per Cu.m

122 x 244 x 4mm BB/CC US$404

122 x 244 x 6mm BB/CC US$399

122 x 244 x 8mm BB/CC US$390

122 x 244 x 10mm BB/CC US$382

122 x 244 x 12mm BB/CC US$380

122 x 244 x 15mm BB/CC US$381

122 x 244 x 18mm BB/CC US$380

Other Panel Product Prices

Brazil

FOB Belem/Paranagua Ports

Export Prices

Blockboard 18mm B/C per Cu.m

Pine US$190 (

Domestic Prices

Ex-mill Southern Region per Cu.m

Blockboard

15mm White Virola Faced US$185

15mm Mahogany Faced No Trade

Particleboard

15mm US$1350 (

Indonesia

Other Panels per Cu.m

Export Particleboard FOB

9-18mm US$135-145

Domestic Particleboard

9mm US$140-150

12-15mm US$135-140

18mm US$125-135

MDF Export (FOB)

12-18mm US$150-160

MDF Domestic

12-18mm US$160-175

Malaysia

Particleboard (FOB) per Cu.m

Export 6mm & above US$140-150

Domestic

6mm & above US$145-160

MDF (FOB) per Cu.m

Export 15-19mm US$165-175

Domestic Price

12-18mm US$180-190

Peru

Domestic Particleboard Prices

Domestic per Cu.m

1.83m x 2.44m x 4mm US$302

1.83m x 2.44m x 6mm US$250

1.83m x 2.44m x 8mm US$215

1.83m x 2.44m x 9mm US$211

1.83m x 2.44m x 12mm US$194

Prices of Added Value Products

Indonesia

Mouldings per Cu.m

Laminated Boards

Falkata wood US$310-315

Red Meranti Mouldings

11x68/92mm x 7ft up

Grade A US$515-525

Grade B US$440-450

Malaysia

Mouldings (FOB) per Cu.m

Selagan Batu Decking US$520-530 (

Laminated Scantlings

72mmx86mm US$475-485

Red Meranti Mouldings

11x68/92mm x 7ft up

Grade A US$625-635

Grade B US$495-500

Ghana

Parquet Flooring

10x60x300mm

FOB Euro per Sq.m

Apa 13.64

Odum 8.57

Hyedua 13.67

Afromosia 13.72

10x65/75mm

Apa 14.47

Odum 10.18

Hyedua 18.22

Afromosia 13.93

14x70mm

Apa 14.79

Odum 10.48

Hyedua 17.82

Afromosia 17.82

10x50mm/77mm

Apa 10.99

Odum 8.50

Hyedua 13.65

Afromosia 12.59

Peru

FOB per Cu.m

Cabreuva KD S4S

Asian Market US$750-800

Cumaru KD, S4S,

(Swedish Market) US$635-650

Cumaru KD, S4S,

(Asian Market) US$565-575

Pumaquiro KD # 1, C&B

(Mexican market) US$450-470

Quinilla KD 12%, S4S

20mmx100mmx620mm

(Asian market) US$570-580

Furniture and Parts

Malaysia

There were two furniture shows in Malaysia in March, the MIFF and MAFEX shows.

MAFEX was organised by one of the more active furniture associations in Peninsular Malaysia and all the available showroom space was taken up for the event.

In terms of size the MIFF show is much larger in terms of floor space and exhibitors. The MIFF show also attracts quite a number of foreign participants and manufacturers from low-cost producing countries like China were also exhibiting.

It was reported that some local manufacturers were complaining about the participation of foreign manufacturers as they felt that the show shoud be restricted to Malaysian manufacturers. Argueing that with the over-capacity in the country the local manufacturers do not need more competitors, particularly from those manufacturers who have a lower labour cost.

In both the shows, it was very evident that buyers or agents from the Middle East were not featured strongly this year compared to other years. Analysts suggest that the current tense situation in the Gulf is responsible for this.

Semi-finished FOB each

Dining table

Solid rubberwood laminated top 3' x 5'

with extension leaf US$19.5-20.5ea

As above, Oak Veneer US$31.5-33.0ea

Windsor Chair US$7.5-8.5ea

Colonial Chair US$10.5-11ea

Queen Anne Chair (with soft seat)

without arm US$12.5-14ea

with arm US$17.0-18.5ea

Rubberwood Chair Seat

27x430x500mm US$2.25-2.45ea

Rubberwood Tabletop per Cu.m FOB

22x760x1220mm

sanded and edge profiled

Top Grade US$490-500

Standard US$475-485

Brazil

Brazilian furniture will, by January 2004, have a seal of guarantee, granted by the Brazilian Association of Furniture Industries (ABIMOVEL). This seal should stimulate exports, assuring higher reliability of the products and by standardising the quality of furniture manufactured in Brazil. Furthermore, it will improve the image of Brazilian furniture abroad, making it easier for Brazil to increase its foreign market share.

ABIMOVEL representatives will supervise the compliance to the rules established by this initiative. Brazil's furniture export potential ihigh because of the quality and quantity of available raw materials. Currently, there are more than 440 industries exporting furniture to various markets. In 1999, there were no more than 160 companies exporting such products. Even so, Brazil is responsible for only 1% of the world's furniture exports. Most Brazilian furniture for export is made from pine solid wood and reconstituted panels. Brazil's southern states of Santa Catarina (SC), Rio Grande do Sul (RS), and Parana (PR) are the country's leading furniture producers.

FOB Belem/Paranagua Ports

Edge Glued Pine Panel per Cu.m

for Korea 1st Grade US$451 (

US Market US$430 (

Decking Boards

Cambara US$650 (

Ipe US$915 (

Report From Japan

Tropical Log Prices

The market for tropical logs continues to be slow with prices dropping slightly this month. Log arrivals in December and January were rather high at 200,000 cubic metres for each month so the inventories at the plywood mills are ample. With the appreciation of the yen the market was pushed down. The Japan Lumber Journal is reporting that the demand for concrete formboard plywood is slowing and mills are becoming cautious in buying logs.

Sarawak Meranti regular log prices are down by 100 yen at 6,100 -6,150 yen per koku CIF. Plywood mills are asking for less than 6,000 yen while the importers are proposing 6,300-6,400 yen so the price difference is considerable.

Meranti Small prices are 5,400-5,500 yen and Super Small prices are 5,300-5,350 yen, which are also down by about 100 yen. With rather ample inventories being carried by the plywood mills, there is very few inquiries for small and super small and there are almost no new offers on these items from the supply side. Under this situation, the log suppliers are reducing the prices. Small Meranti FOB is down to US$121-122 per cubic metre and super small is US$110-111. Kapur and keruing prices are on reportedly on the firm side with FOB prices being US$160 and US$165 respectively.

The PNG log market is also weaker as Taun and Calophyllum log prices for plywood mills are 5,100-5,200 yen per koku CIF, 100-200 yen down from February.

January Housing Starts

Total starts in January were 82,770 units, 1.7% less than the same month a year ago. This makes three straight months of decline. Seasonally adjusted annual starts would be 1,195,000 units. In addition, floor space continues the decline of the past eight months to 7,188,000 square metres, or 5.4% down.

Logs For Plywood Manufacturing

CIF Price Yen per Koku

Meranti (Hill, Sarawak)

Medium Mixed 6,150 (

Meranti (Hill, Sarawak)

STD Mixed 6,250 (

Meranti (Hill, Sarawak)

Small Lot

(SM60%, SSM40%) 5,400

Taun, Calophyllum (PNG)

and others 5,100 (

Mix Light Hardwood

(PNG G3-G5 grade) 4,500 (

Okoume (Gabon) 6,800

Keruing (Sarawak)

Medium MQ & up 7,000

Kapur (Sarawak) Medium

MQ & up 6,600

Logs For Sawmilling

FOB Price Yen per Koku

Melapi (Sarawak)

Select 8,800

Agathis (Sarawak)

Select 8,600

Lumber FOB Price Yen per Cu.m

White Seraya (Sabah)

24x150mm, 4m

1st grade 112,000 (

Mixed Seraya

24x48mm,

1.8-4m, S2S 42,000

Imports of Logs and Lumber

Log and lumber imports in 2002 dropped nearly 10% due to depressed demand. With declining purchase by Japan, Japanese influence on producing countries is getting weaker. Tropical log imports were below 2 mil. cubic metres once more. Imports from Malaysia increased by 10.5% because of increases from Sabah. PNG's log arrivals were heavy during September and December.

Logs from lumber imports from tropical countries also declined due to competition from laminated and engineered wood products. Log imports from North America dropped by 8% but imports from Canada increased by 20% to 1,110,000 cubic metres and Canada's share of the market jumped from 23% in 2001 to 30% in 2002. The most popular species was Douglas fir at 2,920,000 cubic metres, but imports were down 3.7% compared to 2001.

Russian log imports did not exceed 5 mil. cubic metres. Imports of whitewood dropped 19.5% and red pine imports fell by 9.4%. Larch imports also fell 3% to 1,970,000 cubic metres but larch took a 45% share of total log import. Lumber import from Russia expanded considerably to nearly 700,000 cubic metres.

Radiata pine log imports from New Zealand remained at almost the same as in 2001 while total Radiata log imports dropped 7.1%.

North American Log Imports

Log imports from North America in 2002 were 3.7 mil cubic metres, 8% less than 2001. The peak was in 1989 with some 12.0 mil.cubic metres of imports. Douglas fir imports rose to 78.9% up from 75.3% a year earlier. Hemlock recovered slightly to capture a 10.2% share of imports but the volume was less than 500,000 cubic metres. The main discharge ports were Kure, Matsunaga, Matsuyama and Komatsujima handling 51.2% of total import (47.7% in 2001). Ports with large sawmills in the area have a higher share.

Glue Prices Up

All the petrochemical companies have started negotiations for higher prices with their buyers of methanol and formalin, the raw materials used to make glues. Methanol consumption in Japan is currently about 1.9 mil.tonnes, which is about 6.5% of world demand. The supply of methanol has been tightening since last year and import costs have doubled in one year.

The price of methanol in March last year was yen 14.70 per kilogram CIF, but prices jumped to yen 25.27 by December last year. Currently prices look as if they could go over yen 30 per Kg.. The prices have been raised once last August so this is the second round price hike in one year. This will affect the cost of plywood, board, laminated products and other building materials.

For more information on the Japanese market please see n-

Report from China

Guangdong Yuzhu Timber Market

Logs yuan per Cu.m

Merawan

6m 80cm+ dia 2100-2200

6m 60-79cm Dia 1900-2100

Merbau

100+ cm dia 2150-2350

80-90cm dia 2000-2150

Belian

45 cm dia1 700-1900

Kapur

60cm+ dia 1600-1700

Sapelli

60cm+ dia 2800-3000

Less than 60 cm dia 2600

Beech

45-65 cm 2200-2300

Teak

50cm+ dia 7000-7500

Less than 50cm dia 6500-7000

Sawnwood yuan per Cu.m

Teak squares 7000-13000

Teak Boards 9000-12000

Beech 3.5-3.8m 5600

Cherry Squares 7000

Dongwan, Houjie Xinge Wholesale Market

Plywood yuan per Sheet

3mm 22-24

5mm 38-43

9mm 59-70

12mm 86-103

Shanghai Furen Wholesale Market

Logs yuan per Cu.m

Alder/Birch 3000-3200

Black wood 11000-13000

Panga-panga 4500-5500

Padauk 11500-15000

Tamalan 6300

Sawnwood yuan per Cu.m

Beech 5150

Oak 5cm 10000

Cherry 15500-16800

Sapelli 4000-5800

Birch 2500-4200

Teak 8600

Tamalan 6800-7800

Manchurian Ash 3900

Zhejiang Hangzhou Wholesale Market

Logs yuan per Cu.m

Merbau 60+cm1 800-2250

Kauri 60+cm 1450-1600

Panga-panga 35-70cm 7500-8200

Rosewood 30+cm 8000-8200

Indonesian Persimmon

Squares 16cm 14000-16000

Sawnwood

European Beech yuan per Cu.m

Grade A 2.2-2m 3900

Grade AB 2.2-3m 3400

Teak Squares

16-40cm 6800-7500

Hebei Shijiangzhuang Wholesale Market

Logs yuan per Cu.m

Korean Pine

4m 38cm dia 1200-1350

Mongolian Scots Pine

4m 30+cm dia 780-850

6m 30+cm dia 820-900

Sawnwood

Mongolian Scots Pine

4m 5-6cm thick 1050-1250

4m 10cm thick 1050-1200

Plywood yuan per sheet

Indian Panel 1220x2440 24

Malaysia Panel 1220x2440 21

Jiangsu Xuzhou Wholesale Market

Logs yuan per Cu.m

Manchurian ash

4m 30+cm dia 1780-2000

Mongolian Scots Pine

6m 24+ cm 850-1000

Sawnwood

Mangolian Scots Pine

4m 4-6cm 1050

Lauan plywood yuan per sheet

1220x2440

3mm 15-36

7mm 21-32

9mm 30-45

11mm 38-55

For information on China's forestry try: forestry.

Update on France

Furniture Production

France is the third European furniture sector producer, following Italy and Germany, with a share of total European production of about 11%.

According to CSIL estimates, in 2001 French furniture production recorded growth of 2% at current prices, to reach a value of Euro 7,989 million, while between 1996 and 2001 production average annual growth was 3.7% at current rates.

The slowdown in furniture production was due to the sluggish international economy. On the domestic market the construction sector also recorded a poor performance: investments in residential construction fell from +7.6% in 1999 to -0.2% in 2001 in real terms, while for 2002 a slight recovery is expected to be reported. For 2003 a slight recovery is expected.

As regards the breakdown of French furniture production according to product type, the sector shows a certain uniformity among the various segments, with similar quotas for office and kitchen furniture of roughly 12%.

According to results for the first 8 months of 2002, nominal furniture production fell by 6.7% compared to the same period of the previous year. The upholstered furniture sector resisted better, having the same growth as for the same period of previous year. To the contrary, the situation was particularly bad for office furniture sector which declined by 15.7%.

Furniture Prices

Furniture production price growth registered a value of 1.8% in 2001 and 1.2% in the first 8 months' of 2002, compared to the same period of the previous year.

Furniture Demand

According to CSIL estimates, in 2001 apparent domestic consumption recorded brilliant growth of 5.2% at current prices and was worth Euro 9,589 million.

Consumption expanded strongly between 1996 and 2001, recording average annual growth of 5%, and it set to contract in 2002. Actually the French economy resisted the global downturn better then many countries in 2001, but the contraction which it experienced in late 2001 ensure weak moment going in 2002. According to CSIL forecast, real growth of furniture consumption is forecast to slow to just 1.2% in 2002 and to rise to 2% in 2003.

Furniture Foreign trade

France is the third largest exporter and the second largest importer of furniture in Europe.

According to CSIL estimates, in 2001 French exports were worth Euro 2,083 million and recorded a contraction of about 6% compared to 2000. Import recorded growth of 4.5%, reaching a value of Euro 3,683 million. An increasing openness of the French market has also been registered, with imports accounting 38.4% of domestic consumption in year 2001 (30% in 1996) and exports claiming 26% of the national production furniture (22% in 1996).

In 2001 exports were directed mainly towards European Union markets (mainly Germany, Spain, Belgium and the United Kingdom) which absorbed about 74% of total French exports.

France's fifth trading partner, with a quota of roughly 9%, is the United States whose imports from France have almost doubled since 1996, increasing in value at an average annual rate of 20%.

Dorel buys Alma

Dorel, the Canadian manufacturer specialised in childrens products and home furnishings, employing 4500 person in fourteen countries, is concluding the purchase of the Alma Group. Alma is a leading force in the French market with childrens and baby products. The cost of the acquisition is said to be in the region of US$240 million.

New Store for Ligne Roset

Ligne Roset, with a turnover of Euro 373 million and a workforce of1250 person, has just opened a store in St. Germain district, in Paris. The company already owns 36 stores, of which 16 are in France.

Company and Market News From Around Europe

Erpo Improves Performance

German upholstered manufacturer Erpo registered a global turnover of about US$ 32 million in 2002, down by 3.4% compared to the previous year. In contrast imports increased by 1.8%, to a value of US$ 10 million, representing 31% of total turnover.

Office Depot into Madrid

US based Office Depot, Inc. is the world's largest seller of office products and in 2002 there were 1,038 office depot stores operating in 11 countries, mainly in North America, but also in Europe, Japan and Middle East. The Company announced that it plans to expand its existing operations in 2003 in Spain to include retail stores. It plans to launch this new retail sales channel in April of this year with six new office supply superstores located in the heart of Madrid. Office Depot's store concept has been adapted to the needs and tastes of the Spanish businesses and consumers.

Russian Shatura

Shatura, the household furniture maker established in 1961, is estimated to account for about 12% of Russia's furniture market. The sales of Moscow Region-based furniture maker increased by 8.7% on the previous year reaching a value of US$ 104 million.

Report from the UK

The UK stock market hit a seven and a half year low last week and more declines are expected and this is further undermining business confidence. If it was not for a strong performance in the electronic sector the manufacturing performance index would have been showing a steep decline. The latest business index fell below the 50.s level suggesting a contraction of the economy is underway.

Travis Perkins the second largest builders merchant in the UK announced profits up 24.5% showing that at least the building sector is holding up. But, as analysts point out uncertainty is dragging all businesses down and there are fears of the housing bubble bursting.

UK imports continue to grow particularly for builders carpentry and joinery. Prices are still holding steady as everyone comes to grips with higher fuel costs and increased national insurance payments.

Some analysts are fearful that the UK economy is slipping back into the boom and bust cycle of past years and it is difficult, they say, to put all the blame on the threat of military action in the middle east.

Log Prices in the UK

FOB plus commission per Cu.m

Sapele 80cm+LM-C Euro 240-250

Iroko 80cm+LM-C Euro 250-260

N'Gollon 70cm+ LM-C Euro 195-210

Ayous 80cm+LM-C Euro 195-210

UK Sawnwood Prices

FOB plus Commission per Cu.m

Brazilian Mahogany FAS -

Teak 1st Quality 1"x8"x8' Stg2350-2600

Tulipwood FAS 25mm Stg345-365

Cedro FAS 25mm Stg435

DR Meranti Sel/Btr 25mm Stg330-370

Keruing Std/Btr 25mm Stg227-240

SapeleFAS 25mm Stg345-355

Iroko FAS 25mm Stg395-400

Khaya FAS 25mm Stg355-385

Utile FAS 25mm Stg405-415

Wawa No1. C&S 25mm Stg275-295

Plywood and MDF in the UK

CIF per Cu.m

Brazilian WBP BB/CC 6mm US$475

" Mahogany 6mm

When last available US$1265

Indonesian WBP 6mm US$435-47

Eire, MDF BS1142 per 10 Sq.m CIF

12mm Stg34.50

For more information on the trends in the UK market please see

Report From Holland

In several reports mention has been made of the fact that joinery mills in Holland are facing tough times. The economic recession has led to considerably lesser work. Adding to the woes, the unemployment rate in the country has risen rapidly and this is affecting the timber sector as others and the joinery miils cannot escape from 'restructuring' unfortunately.

In the periodical Cobouw and other trade magazines it was mentioned that one of the bigger joinery companies in the country, window frame maker De Vries Gorredijk, had seen turnover dropping drastically during the past months. The disappointing house-building market and severe competition in that sector eroded the turnover and profit of the company. On the other hand costs continue to rise. If this trend continues, many companies will have no option but to lay off staff.

For a while the exchange rate of the US dollar had dropped to euro 1.1. This further drop had led immediately to further price undercutting, which is really seen by traders as a additional burden on an already weak market. Traders wonder if at a price of say 590 euro/Cu.m they cannot sell then could they really sell at 580 or 570 per Cu.m?. If the market demand is so weak no amount of undercutting and enormous price erosion is unlikely to move stocks. Again, when looking at the situation in Malaysia one could wonder whether the trading panic in Holland, with ever reduced sales prices for Meranti, is really necessary. The trade in Holland is hearing news that that most of the sawmills do not have enough logs, that the exporters do not have much in unsold position and that production in the process of kilning is not so high.

Exporters are really rationing their offers into the Dutch market and for certain items they are even unable to make an offer. Looking at supply possibilities of Indonesian Bukit KD in dimensions popular for the Dutch market such as 2.1/2x3.1/2 and 3x5" the available quantity is extremely limited the trade is told. This has to do with the sharply reduced supply of Indonesian timber into Peninsular Malaysia over the past months. Another factor is that the Malaysian authorities have intensified efforts on illegal logging, additionally smaller are seem to be opened for concessions.

For some time the Malaysian authorities have banned the import of Indonesian logs and when putting everything together, the current supply situation is far from favourable to the point that even existing orders seem now to be processed slower than usual. In certain quarters the Dutch trade is hearing that there has been an acute shortage of logs for some sawmills.

Needless to say prices for most items in PHND DRM KD intended for the Dutch market are currently quite firm and some exporters are enjoying a higher CNF Rotterdam price tag. Therefore it is such a pity that traders in Holland are still stumbling over each other with rock bottom price offers. Another looming issue for importers is that of CNF Rotterdam pricing. Shipping companies are reporting tremendous losses; the ever increasing oil prices/bunker surcharges can no longer be absorbed by them and further increases in the container freight rates seem unavoidable. From sources in Port Kelang analysts in Holland report that effective April 1/2003 the container rate Port Kelang-Rotterdam may go up by USD 200-300 per 40ft GP Box. On top of that shipping companies are warning that in the vent of war in the Gulf, freight rates could go up further.

As if the current problems are not enough, suddenly another issue has emerged that could have a major impact on traders and joinery mills particularly in the softwood sector for cladding and exterior use. Apparently the national Garantie Instituut Woningbouw (translated roughly to Dutch Warranty Institute for House-building) has said some thing to the effect that the use of Hemlock no longer falls under the warranty-arrangement and the timber should be excluded from window-components. Apparently, the use of whitewood (vuren in Dutch) has also come into the firing-line. The leading Dutch timber trade magazine 'Houtwereld' has recently published an interesting article on the statements by GIW. This issue will be explored further in the next issue of this report.

CNF Rotterdam per ton of 50 cu ft

Malaysian DRM Bukit

KD Sel.Bet PHND in 3x5" USD925

Indonesian DRM Bukit

KD Sel.Bet PHND in 3x5" USD910 (

Malaysian DRM Seraya

KD Sel.Bet PHND in 3x5" USD940-945 (

Indonesian DRM Seraya

KD Sel.Bet PHND in 3x5" USD920 (

Merbau KD

Sel.Bet Sapfree in 3x5" USD920-930 (

All based on container shipment at US$1750 per G.P. 40 ft. box.

News From the US

The IWPA is reporting that U.S. Customs has finalized rules that may offer savings for importers by allowing them to file a single entry for the multiple imports that result when a carrier splits up a shipment. The new regulations, mandated by legislation approved in 2000, take effect March 27, 2003. The new entry procedure offers importers an alternative to the long-standing requirement that all goods arriving on a single conveyance consigned to one consignee be included on one entry. Until now, complying when carriers have split up their shipments has often meant importers incurred higher duties, user fees, and entry processing costs.

In order to take advantage of the new procedure, an importer must notify Customs in writing as soon as it becomes aware that the carrier has split a shipment up. The importer may opt to have the separate portions of a split shipment released by Customs as they arrive, or elect to delay release until all of the portions are on hand. In the event that a portion of a split shipment arrives at a different port, it must be transported in-bond to the port where the single entry will be filed. The importer will be required to maintain records, such as copies of bills of lading, waybills, or correspondence with the carrier, substantiating that the shipment was split up by the carrier acting on its own.

The new procedure is optional, and importers may choose to continue filing an entry for each portion of split shipments. If you have questions, or have specific concerns, please contact your Customs broker. (Ref. FedEx Trade Networks Bulletin 3/12/03)

Abbreviations

LM Loyale Merchant, a grade of log parcel Cu.m Cubic Metre

FOB Free-on-Board SQ Sawmill Quality

SSQ Select Sawmill Quality KD Kiln Dry

AD Air Dry FAS Sawnwood Grade First and

Boule A Log Sawn Through and Through Second

the boards from one log are bundled WBP Water and Boil Proof

together MR Moisture Resistant

BB/CC Grade B faced and Grade C backed pc per piece

Plywood ea each

MBF 1000 Board Feet BF Board Foot

Sq.Ft Square Foot MDF Medium Density Fibreboard

FFR French Franc F.CFA CFA Franc

Koku 0.278 Cu.m or 120BF (( Price has moved up or down

Appendix 1 Tropical Timber Product Price Trends

Some Sources of Statistical and Economic Data

ITTO Annual Review itto.or.jp/inside/review2001/index.html

International Trade Centre

UN/FAO forestry

Eurostat http//europa.eu.int/comm/eurostat

IMF

World Bank

EUROCONSTUCT

The Yardeni Data Sources are off-line

To subscribe to ITTO’s Market Information Service please contact itto-mis@itto.or.jp

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